Ensuring liability protection

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Homeland Security Department officials plan to make it easier for private companies to develop anti-terrorism technologies without the fear of costly lawsuits. Now experts are asking whether the move will be enough and whether it will work.

As DHS begins the process of limiting the liability for companies developing potentially lifesaving technologies, the government still has a long way to go to make the Support Anti-Terrorism by Fostering Effective Technologies Act of 2002 — better known as the SAFETY Act — an effective part of the war against terrorism.

The law was passed primarily to encourage the development of new technologies. Existing ones can be certified, but only under limited circumstances.

There are other caveats. The liability protection does not cover companies for damage caused by anti-terrorism tools when no terrorist act occurred — for instance, when the technology causes environmental pollution.

Although it is supposed to encourage innovation, the certification process is daunting. DHS officials estimated that filling out the application would take 108 hours. Some vendors say it could be more like 1,000 hours and requires a great deal of legal advice.

But small steps are needed to find new ways to fight terrorism, and encouraging new technologies is one of them.

For example, some contractors who rushed to help victims of the Sept. 11, 2001, terrorist attack on the World Trade Center in New York City learned the hard way that they exposed themselves to unnecessary liability because no exemptions were in place, according to Rep. Carolyn Maloney (D-N.Y.).

Maloney, a member of the House Government Reform Committee, which held a hearing Oct. 17 on the SAFETY Act, said she wants to make sure private companies can extend a hand without opening themselves up to lawsuits.

"Just from New York City, we're still reeling from some of the aftermath of really being supportive to the contractors who rushed to the scene to save the lives of others, and now they're facing certain liability issues when all they were trying to do was save the lives of others selflessly," she said.

In other cases, insurance has either been largely unobtainable or so costly that companies do not want to develop the technologies or put them on the market because they will never recoup their investments.

"It is hardly surprising that companies are unwilling to bet their existence by developing and deploying services and products in this uncertain climate," said Parney Albright, assistant secretary for plans, programs and budgets at DHS. "This means that key capabilities needed to secure the homeland may not be available for deployment."

Rep. Henry Waxman (D-Calif.), ranking member on the committee, said the law is weak and not about encouraging innovation, but providing "absolute immunity" to defense contractors and other manufacturers of anti-terrorism products.

"This act is ironically called the SAFETY Act, when in reality, the only safety it provides is to corporate wrongdoers," Waxman said.

But companies should have some accountability for a critical mistake, according to Harris Miller, president of the Information Technology Association of America.

"In these extreme situations...it's the only way we're going to get these products to the government and protect the American people," Miller said.

DHS' liability coverage

Homeland Security Department Secretary Tom Ridge signed an interim rule last month that put the Support Anti-Terrorism by Fostering Effective Technologies Act of 2002 into effect. The final rule will be issued by the end of this year.

Highlights include:

* The amount of liability insurance coverage is limited for each technology. DHS officials will not require insurance beyond the point at which the cost of coverage would unreasonably distort the price of the technology.

* Vendors will be liable for the percentage of noneconomic benefits proportionate to their responsibility for harm.

* Punitive damages are banned.

* Benefits may be given to plaintiffs who receive other awards, such as insurance payouts.